Modern trade is no longer novel to Thai consumers, with the outlets of international brands, particularly for convenience stores, now proliferating and visible on almost every major street corner in Bangkok and beyond.
According to the Commerce Ministry, during 2001-14, the number of modern trade branches rose to 16,629 from 2,589, with an average growth rate of 26% a year.
General consumers may love the convenience modern trade outlets offer, but their proliferation also brings about side effects -- an adverse impact on traditional small-scale retail shops and higher bargaining power with local suppliers.
"Thailand's retail and wholesale business landscape has now drastically changed as it has been left uncontrolled for a long time, leading giant, cash-rich, modern trade operators to snap up almost all of the prime locations nationwide," said Somchai Pornrattanacharoen, president of the Wholesale and Retail Association. "The entire retail and wholesale business needs to be redefined, and the regimes must comply with international standards and fair criteria, while not impeding the entry of new retailers if the government wants to enact the new law to govern the local retail and wholesale business."
Mr Somchai said the new law also needs to ensure benefits for all stakeholders: consumers, new players and established operators.
"The new regime should not apply to all business sizes," he said. "There should be specific laws and criteria to govern each scale of operations."
According to Commerce Minister Apiradi Tantraporn, the Commerce Ministry is due to submit the draft of the new law governing retail and wholesale business, which was prepared by the National Legislative Assembly (NLA), for the cabinet's approval this month.
The draft will take into account the current retail and wholesale business structure, the market's current conditions and directives in tackling key problems.
Mrs Apiradi said the Commerce Ministry believes it is imperative for Thailand to have a new law governing the retail and wholesale business and agreed in principle that Thailand should have clear-cut measures to promote and protect small-scale retailers.
Santichai Santawanpas, a member of the NLA's subcommittee on commerce, said the NLA likewise views it as essential that retail and wholesale business has a specific law governing it.
He added that the new law establishes clear criteria, requirements, appropriate locations and a corporate income tax payment scheme for new modern trade outlets that request operating licences or branch expansion.
One of the key points is the requirement that modern trade outlets register separately as juristic persons to pay their fair share of taxes.
More importantly, the law will be strictly enforced if unfair trade practices or market domination is discovered.
Mr Santichai said Thailand should also expedite a law governing franchise quality.
During the period before the new bill is legally enforced, authorities will apply the Building Control Act and the Trade Competition Act to tackle modern trade expansion.
Meanwhile, the Commerce Ministry has in fact tried to amend the Retail and Wholesale Business Act four times since 2001. Those failures have opened loopholes for modern trade operators to expand their branches nationwide, with virtually no restrictions on size or location.
The first attempt was initiated in 2001, but the then cabinet saw it imperative to rely on existing laws -- the Town and Country Planning Act and the Building Control Act -- to tackle related problems under the auspices of the Interior Ministry.
The second attempt to push the bill was in 2007, but it was aborted thanks to the dissolution of the House of Representatives. The third attempt was initiated again in 2009, but failed because of political turmoil.
The last push for the bill was 2014 but this once again hit a snag when the Commerce Ministry asked the cabinet to scrap it, saying the bill's content did not comply with the market environment.
Mr Somchai suggested the government also come up with a specific law governing retail outlets operated specially by the elderly, selling small items such as tonic drinks and tobacco in villages and crowded communities. This move will help raise the income of the elderly and reduce the government's financial burden.
Those aged 60 years or older may also be encouraged to form groups of around 10 people to run retail outlets in communities to raise their income, he said.
But Thanavath Phonvichai, vice-president for research at the University of the Thai Chamber of Commerce, said the government should first answer what exactly is the purpose of the new bill they are pushing.
"In the past, the bill on retail and wholesale business was initiated to take care of small-scale retailers and aimed to strengthen them to compete with giant retailers, using the Town and Country Planning Act and the Building Control Act," he said. "But right now modern trade outlets are already established in cities, and most of the giant retailers have expanded into smaller-sized convenience stores. The new bill should thus focus on how to upgrade small-scale retailers' capacity to stay afloat and become more competitive."
Mr Thanavath said it is probably too late for the new bill to save small-scale retailers, urging the government instead to apply the Trade Competition Act to ensure a more even playing field.
Last October, the cabinet approved draft amendments to the Trade Competition Act. The amendments aim to prevent unfair trade practices, ensure fair competition and attract more investment to Thailand.
The salient points are adjusting the degree of penalties to match the gravity of the unfair practices, setting up an independent regulatory body to oversee trade competition and covering state enterprises that run businesses that compete with the private sector.
The amendments also redefine the term "market domination" to cover businesses run by subsidiaries under the same group both vertically and horizontally. The act defines market domination as a market share in the previous year of at least 50% and annual sales of at least 1 billion baht.
Since the act came into force in 1999, 85 cases have been filed with the Office of Thai Trade Competition Commission for vetting, but no cases have thus far resulted in a ruling.
